Media Industry To Outpace Stock Market, Cable Most Profitable

For the first time in five years, the media and entertainment industry is expected to outperform the major stock market indices in 2013.

Measuring 10 sectors of the media and entertainment industry, EY said these companies will have an estimated profit margin of 26%. This beats the S&P 500 index, 24%; FTSE 100 index, 23%; CAC 40 index, 18%; DAX 30 index, 16%; and the Nikkei index, 12%, according to a new report released by EY, the tax and advisory service previously known as Ernst & Young.

During the five years covered by the report -- from 2009 to an estimated 2013 -- cable operators will have the highest average profitability at 41%, followed by cable networks at 37%; interactive media at 35%; satellite television at 26%; electronic games at 25%; conglomerates at 23%; content and information services at 19%; television broadcast at 17%; film and television production at 10%; and music at 10%.

The growth rate of that profitability, measured cash flow (EBITDA) -- earnings before interest, taxes, depreciation and amortization --  is the highest with interactive media at 22%, followed by electronic games at 14%; film and television production at 11%; cable networks at 10%; conglomerates at 9%; TV broadcast at 9%; satellite television at 8%; cable operators at 6%; content and information services at 2%; and music at 1%.

“Media and entertainment companies are maintaining and growing their businesses primarily by growing their digital revenues and scaling back overhead associated with traditional media,” stated John Nendick, global media and entertainment leader at EY.

He adds: “In emerging markets, increases in advertising, as well as rising incomes and media consumption, have also helped drive revenue and fuel long-term growth as consumers in mature markets continue to migrate toward digital.”

"Stock Market Board" photo from Shutterstock.
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